As law makers and regulators nationwide wrestle with the cry for enhanced “predatory lending laws” in the wake of the sub prime mortgage debacle, I believe the Nevada legislature has accomplished a pretty tough assignment.
Wisely the legislature did not attempt to re-write an entire library of regulations already in place governing mortgage lending. They also did not choose to take away good mortgage product available to consumers when responsibly applied. Instead they chose to take a common sense approach to help avoid continuance of what got us into the foreclosure mess.
If the borrower cannot demonstrate an ability to make the required payments for a mortgage, then common sense says the person should not get the loan. Common sense was thrown out the window in this last Real Estate/lending cycle as demand by Wall Street for mortgage backed securities was insatiable.
This new legislation still allows alternative documentation loans to be sold to consumers. The Mortgage Lending Division, the state agency responsible for enforcing State lending law, has declared its’ interpretation of the legislation. Originators must demonstrate through documentation and disclosure using; “any commercially reasonable means or mechanisms” to show that the borrower has the ability and will likely continue to have the ability to repay the loan.
The MLD has even posted sample worksheet and disclosure forms to assist originators and their broker companies in understanding what is expected.
Credit needs to go to the law makers and the many industry professionals I am sure assisted in drafting enforceable common sense law that protects the consumer and allows mortgage product to move to those that qualify.
Tags: · nevada legislature · nevada legislature bill · nevada mortgage laws · predatory lending laws · responsible lending bill ·
Posted in Mortgage Industry News · NevadaNo Comments
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